On the agenda is discussion of a model law that legislators said would establish good market conduct standards.

That drafting effort is in part being driven by federal legislators and regulators who say that action needs to be taken. The call for action was echoed recently in a report issued by the General Accounting Office.

Joel Ario, National Association of Insurance Commissioners secretary-treasurer and Oregon insurance administrator, discussing domestic deference, said that there is an evolution toward a modified approach.

Such an approach would allow non-domiciliary states flexibility to take action on issues that a domestic state is not acting on, he continued.

Domestic deference is an issue that will receive more review as the National Conference of Insurance Legislators, Albany, N.Y., moves its Market Conduct Surveillance model law toward an anticipated adoption in February 2004, said Tim Tucker, NCOIL director of state-federal affairs.

Nancy Davenport, senior counsel and director, Northeast region, with the American Council of Life Insurers, Washington, said that the NCOIL model is making good progress, but the issue of domestic deference still needs to be discussed. Questions such as whether a larger state would enact a model law with domestic deference need to be answered, she continued.

And, Ms. Davenport adds, definitions of terms such as "complaint" and "significant premium volume" are needed in order to ensure uniform market conduct treatment among states.

Mr. Ario mentioned there are three pillars that are important to market conduct oversight: market analysis through the effective use of data, uniformity and collaboration among states.

Mr. Ario said that the market analysis handbook, a compilation of tools that regulators have been using to monitor market conduct, is now ready for use. Regulators' efforts to use data calls to assess market analysis are making strides, but the idea still needs further testing, he added.

Any market conduct reforms should retain a commissioner's authority to make a decision on a market conduct issue, Mr. Ario said.

Mr. Connolly is a senior editor with NU's Life-Health Edition